UK government to set out spending plans amid aid fears

Britain’s Treasury chief is being urged to resist calls to cut the proportion of money the government allocates to overseas aid as he prepares to unveil the damage to the public finances wrought by the coronavirus pandemic

He is set to tell lawmakers later Wednesday that the deterioration in the public finances has been worse than at any time since wartime, but that now is not the time to announce widespread spending cuts and tax rises.

Figures last week showed that the country’s debt pile had passed the 2 trillion-pound ($2.7 trillion) mark for the first time in British history, taking it over 100% of annual national income.

Since the onset of the pandemic, the government has ratcheted up spending to support the economy during arguably its deepest recession in 300 years. As well as loosening the taps, including funding a dining discount scheme in the summer that cost the taxpayer around 849 billion pounds, according to Treasury figures released Wednesday, it has seen tax revenues fall sharply as the economy has shrunk.

Sunak is set to inform lawmakers that the British economy will have contracted by more than 10% by the end of the year.

With the public finances in such bad shape, he is set to make a start on repairing them. He is widely expected to freeze the pay of workers in the public sector and there are fears that he is to cut the proportion of Britain’s national income that the government allocates to foreign aid, to free up billions.

Concerns have mounted over recent days that the government is about to abandon its commitments on overseas aid. Some in the Conservative government have argued for a reduction in the commitment to maintain aid spending at 0.7% of national income to 0.5%.

Nobel Prize laureate Malala Yousafzai joined calls for Sunak to make sure that the commitment is not ditched during his spending review, which will allocate money across governmental departments.

“COVID-19 could force 20 million more girls out of school,” she said. “To keep girls learning, we need leaders to prioritise education.”

Sunak has pledged to make jobs his “number one priority,” and is set to announce the launch of a three-year programme, worth 2.9 billion pounds ($3.8 billion) to help more than a million unemployed people get back into work in the wake of the pandemic.

Sunak, though, is braced for a backlash from trade unions over an expected freeze on public sector pay as he begins to repair public finances.

Sunak is also expected to announce measures to support Prime Minister Boris Johnson’s “levelling-up” agenda with the publication of the much-delayed National Infrastructure Strategy and investment across the U.K.’s regions, particularly in the north of England where the Conservatives won seats at the last general election.


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